European Central Bank (ECB) Vice President Luis de Guindos stated that the current global economic uncertainty under Trump's administration surpasses that of the COVID-19 pandemic.
Trade War Threats Disrupt Global Markets
The Trump administration's refusal to cooperate with international partners poses challenges for central banks in forecasting inflation, growth, and interest rate movements. ECB President Christine Lagarde warned of the potential negative impact of a trade war with China, Canada, and the EU on the global economy. Despite declining inflation and interest rates, consumer spending remains low amid widespread uncertainty.
Central Banks Hold Rates Amid Uncertainty
Central banks worldwide are on edge due to Trump's policies. The Federal Reserve is expected to keep rates steady. Other central banks, including those in Japan, Indonesia, and China, are likely to maintain current rates as they await clearer economic data.
Economic Policy: What to Expect Next?
European governments are increasing defense spending with unclear long-term impacts. Luis de Guindos mentioned potential positive effects on economic growth without significant inflation impact. Trump's policies also affect countries like Russia and Argentina, where high inflation and interest rates are key issues.
The Trump administration's policies are creating significant uncertainty in the global economy, prompting central banks to adopt a wait-and-see approach, which could severely impact global markets and economic growth.
